No changes in income tax slabs; exemption limit kept unchanged in Budget 2026

• Income tax slabs remain unchanged for FY 2025-26, offering no new relief.
• Standard deduction increased to Rs 75,000 for salaried employees.
• Taxpayers can still choose between old and new tax regimes when filing returns.

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Finance Minister Nirmala Sitharaman announced several measures on February 1, 2026; however, the government has decided to keep income tax slabs unchanged, offering stability in the tax structure but no fresh relief for individual taxpayers. The basic exemption limit has also been retained at the existing level, with no increase announced in this year’s Budget.

Under the new tax regime for FY 2027, salaried individuals under 60 will pay no tax on income up to Rs 4 lakh. Income between Rs 4 lakh and Rs 8 lakh will be taxed at 5 per cent, income between Rs 8 lakh and Rs 12 lakh at 10 per cent, income between Rs 12 lakh and Rs 16 lakh at 15 per cent, income between Rs 16 lakh and Rs 20 lakh at 20 per cent, income between Rs 20 lakh and Rs 24 lakh at 25 per cent, and income above Rs 24 lakh at 30 per cent. The standard deduction has been increased to Rs 75,000 for salaried employees. In addition, a rebate under Section 87A will be available for net taxable income up to Rs 12 lakh, making such income fully tax-free.

The standard deduction has also been kept unchanged at the current level. No increase was announced for salaried employees and pensioners. This means taxable income for most taxpayers will remain the same as in the previous year, unless there are changes in salary or other income sources.

No changes have been made to the old tax regime either. The existing slabs, exemptions and deductions continue as before. Taxpayers can still choose between the old and new regimes while filing their returns, depending on which option suits them better.

Experts said the decision is likely to disappoint sections of the middle class that were expecting higher exemption limits or lower rates. With inflation and living costs rising, many taxpayers were hoping for additional relief in this Budget.

At the same time, experts said that keeping the slabs might encourage more people to gradually adopt the new tax system, which has lower rates but fewer exemptions. They also noted that the old system remains useful mainly for those with significant deductions from housing loans, insurance, provident fund contributions, and other investments.

For taxpayers without significant deductions, the new regime remains the simpler choice, even without any recent changes this year.